NOTE 01
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
within twelve months of the reporting date
are recognised in respect of employees’
services up to the reporting date and are
measured at the amounts expected to be paid
when the liabilities are settled.
(ii) Long term obligations
The liability for long service leave and associated
on-costs is accumulated from the date of
commencement. They are measured at the
amounts expected to be paid when the liabilities
are settled and discounted to determine their
present value. Consideration is given to expected
future wage and salary levels with an allowance
for expected future increases.
As not all annual leave is expected to
be taken within twelve months of the
respective service being provided, annual
leave obligations are classified as long term
employee benefits in their entirety.
Annual leave is measured on a discounted
basis. The emergence of a deep high quality
corporate bond market has resulted in a move
from using the Australian Government bond
rate to the new corporate bond market rate
as per the G100 when discounting employee
benefit liabilities as at 30 June 2015. This is
treated as a change in accounting estimate.
(w) Financial Instruments
The Group’s principal financial instruments
comprise receivable, payables, borrowings,
bonds, cash, funds on deposit and derivatives.
Non-derivative financial assets
Receivables are financial assets with fixed or
determinable payments that are not quoted in
an active market. Such assets are recognised
initially at fair value plus any directly
attributable transaction costs. Subsequent
to initial recognition they are measured at
amortised cost using the effective interest
method. Receivables comprise cash and cash
equivalents and trade and other receivables.
Cash and cash equivalents in the balance
sheet includes cash on hand, funds on
deposit with financial institutions, other short
term, highly liquid investments with original
maturities of 180 days or less that are readily
convertible to known amounts of cash and
which are subject to an insignificant risk of
changes in value. Investments in shares are
held at cost and reviewed for impairment.
Non-derivative financial liabilities
Financial liabilities are recognised initially on the
trade date and derecognised when contractual
obligations are discharged, cancelled or
expired. Such liabilities are recognised at fair
value less any directly attributable transaction
costs, subsequently measured at amortised
cost using the effective interest method.
Other financial liabilities comprise loan facilities
(see note 10), bonds, bank overdrafts and
trade and other payables.
Derivative financial instruments
The Group can hold derivative financial
instruments to hedge its foreign currency
and interest rate risk exposures. On initial
designation of the derivative as the hedging
instrument, the Group formally documents
the relationship between the hedging
instrument and the hedged item, including
the risk management objectives and strategy
in undertaking the hedge transaction and the
hedged risk, together with the methods that
will be used to assess the effectiveness of the
hedging relationship.
The Group makes an assessment, both at
the inception of the hedge relationship as
well as on an ongoing basis, of whether the
hedging instruments are expected to be
highly effective in offsetting the changes in
the fair value or cash flows of the respective
hedged items attributable to hedged risk and
whether the actual results of each hedge
are within a range of 80 - 125 percent. For a
cash flow hedge of a forecast transaction, the
transaction should be highly probable to occur
and should present an exposure to variations
in cash flows that ultimately could affect
reported profit or loss.
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